The COVID-19 pandemic, financial inequality and mental health

6th May 2020

We all can experience mental health problems, whatever our background or walk of life. But the risk of experiencing mental ill-health is not equally distributed across our society. Those who face the greatest disadvantages in life also face the greatest risk to their mental health.

The distribution of infections and deaths during the COVID-19 pandemic, the lockdown and associated measures, and the longer-term socioeconomic impact are likely to reproduce and intensify the financial inequalities that contribute to the increased prevalence and unequal distribution of mental ill-health.

This briefing discusses the mental health effects of these financial inequalities in the context of the COVID-19 pandemic. It draws evidence from the ‘Coronavirus: Mental Health in the Pandemic’ research – a UK-wide, long-term study of how the pandemic affects people’s mental health. The study is led by the Mental Health Foundation, in collaboration with the University of Cambridge, Swansea University, the University of Strathclyde and Queen’s University Belfast.

Since mid-March 2020, the project has undertaken regular, repeated surveys of more than 4000 adults who are representative of people aged 18+ and living in the UK. The surveys are conducted online by YouGov. They shed light on people’s emotional responses to the pandemic, the key social drivers of distress, coping mechanisms and suicidal thoughts. A diverse Citizens’ Jury contributes qualitative information, personal insights and comments on the data generated by the study. Ethical approval has been obtained from the Cambridge Psychology Research Ethics Committee.

To contextualise our findings, first, we review existing knowledge on the links between financial inequality, employment and mental health; then, we review what official figures tell us about the financial consequences of the COVID-19 pandemic. This review provides the backdrop to our survey data and Citizen’s Jury findings. We conclude with recommendations to the UK central and national governments.

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COVID Financial Inequality and Mental Health briefing

Financial Inequality, Employment and Mental Health: what did we already know?

The link between poverty and mental health has been recognised for many years and is well evidenced. In general, people living in financial hardship are at increased risk of mental health problems and lower mental well-being.1 It is well established that people in the lowest socioeconomic groups have worse mental health than those in the middle groups, who in turn have worse mental health than those in the highest. This ‘social gradient’ means that mental health problems are more common further down the social ladder.2

The evidence of this social gradient in the UK is clear and has been established repeatedly. For example, the Health Survey for England has consistently found that people in the lowest socioeconomic class have the highest risk of having mental health problems.3 As another example, a 2017 survey commissioned by the Mental Health Foundation with participants from across the UK found that 73% of people living in the lowest household income bracket (less than £1,200 per month) reported having experienced a mental health problem during their lifetime, compared to 59% in the highest household income bracket (more than £3,701 per month).4

The mental health risk of economic hardship starts early in life. Socioeconomically disadvantaged children and adolescents are twice as likely to develop mental health problems.5 The World Health Organization (WHO) has concluded that material disadvantage “trumps” emotional and cognitive advantages.6 In other words, people from poorer economic circumstances are still more likely to have worse mental health, even if they have been supported to develop good personal coping and cognitive skills. People with an existing psychiatric diagnosis are also at greater risk of financial inequality and less likely to be employed, fuelling their experience of multiple disadvantages.

Furthermore, debt itself is an issue: people in debt are more likely to have a common mental health problem,7 and the more debt people have, the greater the likelihood of this.8 One in four people experiencing a mental health problem is in problem debt, and people with mental health problems are three times more likely to be in financial difficulty.9

Employment is one of the most strongly evidenced determinants of mental health.10 Lack of access to either employment or good quality employment can decrease quality of life, social status, self-esteem and achievement of life goals.11 In the Mental Health Foundation’s survey across the UK in 2017, 28% of people who identified as unemployed reported current experience of negative mental health, compared to 13% of people in paid employment, 20% of people in full-time education and only 9% of people who had retired.4

Studies have found that unemployment has a range of negative effects, including relative poverty or a drop in standards of living for those who lose a job, stresses associated with financial insecurity, the shame of being unemployed and in receipt of social welfare and loss of vital social networks.12 The Organisation for Economic Co-operation and Development (OECD) has described how job loss has a traumatic and immediate negative impact on mental health and noted that there is further damage where unemployment continues into the long term.13 A meta-analysis has shown that unemployment is associated with various distress, including mixed symptoms of distress, depression, anxiety, psychosomatic symptoms and drops in subjective wellbeing and self-esteem. The same study found that 34% of unemployed people experienced mental distress, compared to 16% of those in employment. Importantly, the analysis showed that unemployment causes this distress.14 Research also consistently shows that unemployment has been associated with lower well-being.15 Furthermore, job insecurity and restructuring also negatively affect employee well-being over time.16

It does not only have a job that can benefit mental health; the OECD has recognised that the quality of employment also matters for supporting mental well-being.13 In its 2008 Employment Outlook report, the OECD found that work-related mental health problems occur more often for employees with detrimental working conditions (e.g. toxic stress, discrimination, and bullying).13 The conclusion that good quality work is important for fostering good mental health has been affirmed by successive UK policy reports and was emphasised by Farmer and Stevenson in their 2017 review of mental health and employment.17 In their report, they incorporated good working conditions (e.g. fair pay, job security, education and training, and staff consultation and representation) as one of their proposed mental health core standards.17 Some groups of self-employed workers are also vulnerable to lower mental well-being. One-quarter of European self-employed workers are in situations characterised by economic dependence (i.e. dependent on a single employer for their source of income), low levels of autonomy and financial vulnerability, and people in this category have reported lower levels of mental well-being than self-employed workers with more stable work.18

The Financial Inequalities of the COVID-19 Pandemic and Mental Health

The Institute for Fiscal Studies (IFS) has stated that the economic downturn resulting from the COVID-19 pandemic “will have significant consequences for people’s health outcomes in the short and longer term.”19 There is no health without mental health, and economic recessions' negative effects on people’s mental health are already well-evidenced.20

In April of this year, the IFS pointed out that: “Groups that are vulnerable to poor health are likely to be hit hardest even if the crisis hit all individuals equally, but the evidence is already emerging that the economic repercussions of the crisis are falling disproportionately on young workers, low-income families and women (Joyce and Xu, 2020).”19 The Breugel agency has also noted that among workers across Europe, the self-employed are being hit hardest by the work-related effects of social distancing measures.21

In terms of the scale of potential need, the IFS cites Janke et al. (2020) in stating that if the economic downturn were similar to that after the 2008 financial crisis, then the number of people of working age suffering from poor mental health would rise by half a million. Research in England on the 2008-10 recession showed that each 10% increase in the number of unemployed men was significantly associated with a 1.4% (0.5% to 2.3%) increase in male suicides.22 We know that the mental health impacts of job loss and economic or employment uncertainty, compounded by financial worries about housing, heating and food, can be serious. They can also contribute to feelings of hopelessness. This may be what lies behind the high rate of suicidal thoughts and feelings among unemployed people. We don’t know yet whether the COVID-19 pandemic will affect suicide rates. Still, we do know that suicide is potentially preventable if we take action to mitigate those effects early rather than waiting for the number of suicides to rise.

In May this year, the Office of National Statistics (ONS) published statistics on COVID-19 deaths broken down by local area and socioeconomic deprivation. These revealed that the age-standardised mortality rate of deaths involving COVID-19 in the most deprived areas of England was 55.1 deaths per 100,000 population, compared with 25.3 deaths per 100,000 population in the least deprived areas (see the ONS website), showing that people living in deprivation are bearing the brunt of the pandemic in the UK.

The report further showed that for most socio-economic groups, the number of COVID-19 deaths broadly maps the existing social gradient of health, with the proportion of COVID-19 deaths much worse in the three most deprived deciles when compared with overall deaths. In mental health terms, this further suggests that the burden of excess bereavement and trauma will fall most heavily on those already disadvantaged.

Our Survey Data

The impact of financial inequalities on mental health during the pandemic is becoming evident in our longitudinal research.

Worries about employment:

  • One in five people surveyed (20.55%) – and more than one-third (34.01%) in full-time work – are concerned about losing their job
  • One-fifth (19.70%) of people surveyed who identified as unemployed have had suicidal thoughts and feelings in the last two weeks – this is compared to 8.64% of people in employment
  • People most worried about financial concerns are people in middle age


  • Twice as many unemployed people (25.85%) surveyed say they are not coping well with the stress of the pandemic compared to people in employment (12.25%)
  • Over one in 10 (10.93%) unemployed people surveyed say nothing has helped them cope with the stress of the pandemic

Worries about finances, debt and having enough:

  • Whilst the picture for many is improving, one-third (32.66%) of UK adults say they worry about their finances, such as bill payments and debt.
  • Using a broad categorisation, people in lower socioeconomic groups (c2de) (35.11%) are more likely to have financial concerns than people in higher groups (abc1 – 30.81%)
  • Almost half of the people surveyed who are unemployed (44.7%) say they were worried about having enough food to meet their basic needs in the past two weeks, compared to 29.32% of people in employment). Since early April, unemployed people are the only group for whom worry about this issue has not reduced

The Verdict of Our Citizens’ Jury

Our Citizens’ Jury stressed that although the coronavirus pandemic is felt across most of the world, and the UK lockdown measures apply across the country, not everyone experiences its consequences in the same way. The Jury expresses the need to view health and financial security as equally important.

While there will be generic worries about the future across the population, the detailed picture is far more nuanced. People are affected differently depending on their age, demographic background, employment sector, type of job and contract, geographical area, membership of at-risk groups and more. Self-employed, small businesses, people with disabilities, people from Black, Asian and Minority Ethnic backgrounds, domestic abuse survivors and informal carers were considered high-risk groups in this context.

They also felt that financial security, related worries, and mental health problems are evolving situations (dynamic, not static). In other words, someone might be fine now, perhaps not in three or six months’ time. They expressed worries that these shifts have been happening since the start of the pandemic and other factors – such as Brexit – might further exacerbate financial insecurity and inequality in the UK.

The voluntary sector is crucial in the coronavirus response because it supports and safeguards large parts of the population (including those who may be digitally excluded). The level of financial and other support from the government should reflect that. Any government support should be equitably distributed and safeguard the sector's diversity.

Overall the Citizens’ Jury validated the view that protecting people’s mental health was of critical importance during this period. A fear was expressed that if the lockdown is prolonged and/or repeated – the UK might lose more people to the social and economic consequences of the lockdown than to the virus itself.


Before the pandemic, it was already evident that higher national levels of financial inequality are linked to a higher prevalence of mental health problems. As countries become richer but remain unequal, the rates of mental health problems increase. This is an important risk for the UK government to consider as the recovery from the pandemic begins. We can expect that the financial inequalities that lead to the increased prevalence and unequal distribution of mental ill-health will be intensified, and the benefits of recovery will not be reaped equally by everyone. We need to see immediate and concerted policy action based on evidence to address this. We recommend the following actions:

Economic security

As a first step, the Universal Credit advance payment should immediately be made a grant, removing the current requirement to repay it over the following 12 months. For the duration of the pandemic and the follow-on economic downturn, this grant should be given to all applicants, regardless of their circumstances. In the medium term, the Government should convene an expert Taskforce to consider the learning from the Covid-19 crisis and develop proposals for reducing economic insecurity on a long-term basis.

Tackling the debt crisis

Many households will face a financial cliff-edge unless urgent action is taken on debt. According to the Office of National Statistics, the average UK household credit card and personal loan debt in 2019 were £9,400. Importantly, the poorest households have the highest debt-to-income ratio. This means that households will not be in a position to borrow their way out of this crisis; substituting wages with loan debt will only make people’s finances worse, given the medium to long-term economic uncertainty.

Government and all private sector providers should pause all debt collection, bailiff visits, interest accrual on debt and deductions from benefits during the pandemic. This will provide a degree of security for people who fall behind on their bills.

We are also calling on the UK’s energy suppliers to immediately halt their use of debt collectors to retrieve unpaid bills and uphold the agreement they have signed with the Government to help households during the pandemic.

Finally, with support from the central government, local authorities should ensure that payment holidays on rent and council tax are being offered to those who need them.

Action on Child Poverty

The sharp increase in foodbank use, particularly among families with children, is a real cause for concern. Those who relied on community and school resources such as breakfast clubs or grandparents to help with childcare suddenly have to cope on their own. More time spent at home means higher bills and fewer opportunities to shop around for affordable food. The Government should temporarily increase Child Benefit, the child element of Universal Credit and Child Tax Credit Payments, to help low-income families weather the storm.

We are also calling for the two-child cap and the benefit cap to be lifted to prevent households from being pushed further into poverty.

In-work poverty

The immediate priority must be to guarantee economic security for all. However, research shows that more than half of people in poverty now live in working families. Too many people are being trapped in poverty by low wages, zero-hour contracts and job insecurity. For too long, key workers such as social care staff have been paid less than the Real Living Wage. Governments across the UK must ensure that all key workers are paid the Real Living Wage. On a medium-term basis, governments across the UK must honour their commitments to tackle low pay across the board.

Prevent stress due to the risk of eviction

The Government should extend the current prohibition of evictions for at least another three months after the end of any lockdown period and keep this under review with the potential for further extension.

Ensure business changes are working for vulnerable customers

Government should monitor the measures being undertaken by businesses to support their vulnerable customers (including those with existing mental health problems) during the pandemic to ensure that these measures are effective.

Targeted outreach to people who are unemployed

The Department of Work and Pensions should make free psychological support available to all unemployed people and inform them of how they can access it.

Improve infrastructure for social connectedness

National governments should provide a designated funding stream for local authorities to support community development initiatives, including peer support, to promote public mental health. This should be available to all communities and include targeted initiatives for vulnerable communities.

A Whole-Government COVID-19 Mental Health Response and Recovery Plan

The UK Government and devolved governments should ensure a cross-governmental approach to mental health and reducing health inequalities during the COVID19 crisis and in the recovery phase by drafting a Whole-Government COVID-19 Mental Health Response Plan.


The COVID-19 pandemic is putting a huge strain on people’s mental well-being. Our longitudinal study on the mental health effects of the pandemic shows that the burden of mental distress is borne disproportionately by those with less economic security. In some cases, these people face considerable challenges, such as those with existing mental health problems surviving in a destructive cycle of poverty and mental distress or those facing structural inequalities due to belonging to an ethnic minority group.

Unless action is taken to protect vulnerable people’s economic security and support them in dealing with the resulting stress, mental health inequalities will likely be exacerbated as the pandemic, and the ensuing economic downturn proceed.

There will be no vaccine for these populations' mental health effects of the COVID-19 pandemic. Instead, we should urgently invest in meeting our fundamental and complex human needs, starting by addressing the key issue of financial inequality in our societies.


The following have worked on this briefing and the research behind it:

Antonis Kousoulis, Shari McDaid, David Crepaz-Keay, Susan Solomon, Chiara Lombardo, Jade Yap, Lauren Weeks, Chris O’Sullivan, Rachel Baird, Richard Grange, Toni Giugliano, Lucy Thorpe, Lee Knifton, Mark Rowland (from the Mental Health Foundation); Tine van Bortel (from the University of Cambridge); Ann John, Sze Lee (from Swansea University); Alec Morton (from Strathclyde University); Gavin Davidson (from Queen’s University Belfast)

© Mental Health Foundation, May 2020


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